Florida mortgage applications slumped over the past week, weighed down by a drop in demand for home loan refinancing, the Mortgage Bankers Association said. This index of Florida mortgage activity is seasonally-adjusted and for the week ending December 15.

The index decreased 10.2 by percent to 647.6 from the previous week’s 721.2, which was the highest level recorded in over a year. A rise in home loan rates cooled the demand for Florida mortgage refinancing, which had boosted applications by over 10 percent the week prior.

Borrowing costs on 30-year fixed-rate mortgages (the industry’s benchmark loan), excluding fees, averaged 6.10 percent, up 0.08 percent from the previous week.

Two weeks prior, 30-year mortgage rates fell to 5.98 percent, the lowest level registered since back in October 2005, when the record housing boom was just about ready to cool off.

Meanwhile, the MBAA’s seasonally adjusted index of conventional mortgage and Florida home equity loan refinancing applications decreased by 14.6 percent to 1,968.8.

The MBA’s seasonally adjusted home purchase index, which tracks loans designed to buy, not refinance homes, fell 5.9 percent to 436.5. The index was also below its year-ago level of 453.1.

The group’s purchase index is considered a timely gauge of sales, which have fallen off considerably so far this year, especially in South Florida, after five years of record growth. Expect applications to remain low this week, due in large part to the holiday season.

Good luck.

Finding an apartment in one of the rental communities in Manatee County is becoming an increasingly difficult task, the Bradenton Herald reports.

The occupancy of developments with 50 or more units was 97.38 percent during the third quarter of 2006, recent research shows.

“The whole Florida rental market is doing better than ever,” said Michael Slater, president of Triad Research & Consulting.

Since the first quarter of 1998, Manatee County’s occupancy rate hasn’t fallen below 95 percent. Triad Research & Consulting tracks the number of rental communities with 50 or more units in Manatee County. As of the third quarter, there were 54 developments that met that criteria.

There are 10,981 rental units available in those 54 developments, an increase of almost 2,000 units since 2000. In those six years, Manatee County has grown considerably, along with the rest of the Florida population. An estimated 10,805 people moved to Manatee County in that time period.

From just mid-2004 to mid-2005, the population of Manatee County grew by almost one person per rental unit, according the U.S. Census Bureau.

Several other contributing factors have led to the increases in rentals.

While at first, skyrocketing price tags on homes priced many first-time buyers out of the market, condo conversions also took a chunk out of the number of units available for rent.

The slowdown in residential construction is also a factor. While Florida mortgage costs remain modest, the area’s home prices have shot up so far that the demand for home purchases has waned considerably this year. In turn, many builders are content to sit tight.

As demand for rentals throughout the Sunshine State remains solid, 2006 has shown the demand for buying homes doesn’t have the same stability. Now, investors who got stuck with homes they can’t sell have turned to renting them out in order to make the Florida home mortgage loan payments.

“We’re flooded with homes that have been taken out of the sales pool,” said Sharone Martinelli of Wagner Realty.

Much like those who listed their homes as the Southwest Florida housing market settled, some people who have turned to leasing their properties instead set unrealistic expectations in 2006.

• Historically, investors have been able to get about 1 percent of the home’s value as a monthly rent. Now home owners are lucky to get a half percent.
• For instance, a $300,000 property that might have fetched $3,000 a month in rent is now lucky to get $1,500 a month.
• Of course, owners are better off taking $1,500 a month this year in a tepid rental market than not seeing any income from the property at all.

However, some homeowners’ expectations are what is holding people back from renting them. A young couple could buy something for $2,000 a month, and although it might not be the same size as what they could rent for the same price, they would be building home equity and investing in their future.

That didn’t stop the number of rentals from soaring as many waited for prices to fall to levels within their price range. When residential properties start moving at a more normal pace, rent will escalate as well, experts believe.

That, coupled with the fact that Florida home loans will also climb when sales start to pick back up, will hopefully be enough catalysts to bring new buyers to the table. The early arrival of cold weather in the North has brought some of the seasonal visitors back a little early. While some purchased second homes during the boom, many are content to rent.

Looking for a Florida home mortgage in Tampa Bay? Here’s a new locale to consider:

Avatar Properties Inc. officially opened its newest master-planned community, TerraLargo, located on 640 acres off Sleepy Hill Road in Lakeland. Those looking to buy in the Tampa Bay housing market could do a lot worse.

Once completed, TerraLargo will have six residential villages with 618 single-family homes and executive residences on 50- and 70-foot-wide home sites.

Avatar plans to offer 10 floor plans ranging from 1,400 to more than 3,000 square feet of living space priced from the low to mid-$200s.

The community’s 5,000-square-foot TerraLargo Club includes a reception lounge, kitchen, multipurpose room, fitness center and children’s playroom. Outside the club is a deck and terrace with another 6,000 square feet that circles around a 3,500-square-foot pool.

Our Florida mortgage brokers are standing by now for more information. Don’t wait longer to contact us about this and other locations you may have heard about.

With foreclosures rising across the state and nation, the National Association of Realtors recently released a press released. It focused on the borrowers most likely to default on their Florida home loans: those with adjustable-rate mortgages.

Here are pieces of advice from it:

Contact the lender: Homeowners facing foreclosure often make the mistake of avoiding the lender, which is exactly the wrong thing to do. Contact the lender early, explain your situation, and find out your options.

Contact family members or friends: Ask for help. If you were in a position to assist a family member or friend who was facing a similar situation, how would you feel if they didn’t ask you for help?
Reinstate the mortgage: If you can come up with enough cash to bring Florida mortgage payments up to date, the lender may agree to hold off on foreclosure proceedings.

Negotiate a forbearance: Your Florida home loan officer may be willing to restructure your payments to help you get back on track after a temporary financial setback.

Refinance out of foreclosure: With a good credit history, you may be able to consolidate your debt with a loan that requires a total monthly payment of less than you’re paying on all your other loans put together. This is why you should speak to our brokers today about Florida mortgage refinancing.

Sell your home: If you owe less on the home than what you can sell it for, sell the home and find more affordable accommodations. Selling the home is what 90 percent of those who are facing foreclosure really need to do, but unless you act quickly, you may run out of time.

Negotiate a short sale: Lenders typically want to avoid foreclosing because it costs them money. You may be able to convince the lender to accept less than the total amount owed on the Florida mortgage loan.

Giving a deed in lieu of foreclosure: If you owe much more on a house than what you can sell it for, you may be able to offer the lender the deed in exchange for them not foreclosing on you. You lose the house but retain your credit rating.

File for bankruptcy: Bankruptcy is rarely the best choice. In most cases, it simply buys you some time, but is often the most costly option.

Do nothing: Doing nothing is, by far, the worst option. It ultimately leads to losing your home, any equity you may have built up in that home, and compromising your ability to qualify for future loans.

In another symptom of the slowing South Florida housing market, DiVosta Building Corp. said Monday it will lay off 218 of the 552 workers at its Palm Beach Gardens headquarters.

The laid-off workers include 87 journeymen, 58 laborers and 50 apprentices. They’ll lose their jobs between February 16 and March 1, according to the Palm Beach Post.

“We’re trying to match our work force to the construction pace,” said Beth Cocchiarella, spokeswoman for DiVosta parent company Pulte Homes.

DiVosta is just the latest of the big home builders to cut workers.

Lennar, Toll Brothers and Centex - all with significant operations in South Florida - also have laid off employees, industry experts say. Even smaller local builders such as Sunland Homes of Jupiter, which this year cut 20 of its 45 employees. Both home prices and home sales have fallen off in a big way this year.

Builders went on a hiring binge in 2004 and 2005 to meet record demand for new homes. But now that the housing boom - and the wave of speculation that accompanied it - has ebbed, more people can’t make the necessary Florida mortgage payments needed to buy homes. In turn, builders have been forced to cut workers.

“They want to bring the production of homes back in line with true demand,” said Bradley Hunter, an analyst at Metrostudy in Boca Raton. “Builders were building at a pace that was matching an artificial demand.”

But even as the residential construction market cools, the commercial real estate market remains strong, Hunter said, which provides opportunity for DiVosta’s laid-off workers.

“Pouring concrete is pouring concrete, and laying brick is laying brick, so they can transfer those skills,” Hunter said.

Consumer confidence in Florida and throughout the Southeast remained high in the second half of this year and was sunnier than the national outlook.

However, there are doubts - mostly in the South Florida housing market.

Those recent findings are from an RBC Centura look at consumer attitudes and spending. The bank said its RBC Southeastern Consumer Attitudes and Spending by Household (CASH) Index for the second half of 2006 was 99.8 out of a baseline of 100 points, established in 2002.

That’s a slight increase from 99.5 for the first half of the year.

Southeastern consumer confidence took a nosedive in the second half of 2005, following a devastating hurricane season and subsequently higher energy costs. In the second half of 2006, however, consumer confidence levels rebounded by 25 points and stabilized during the third and fourth quarters as home loan rates remained low.
The optimistic outlook for the Southeast far outpaces the national index for the July-to-December periods - at 99.8, compared with 85.4.

RBC Centura said that deviation is not surprising because the Southeast region typically has a more-positive attitude toward the economy than the rest of the nation. There is no doubting the economic progress in Florida over the first half of this decade.

Overall, the bank said consumer confidence was driven largely by optimistic expectations for the future and confidence in job security.

With a positive outlook for the future and good job security, the Southeast seems positioned nicely for continued economic growth, RBC economists said. The drop in economic confidence following Hurricane Katrina has corrected and the Southeastern attitudes have returned to normal.

Despite a real estate market that has priced out many buyers, Florida mortgage rates have remained low, leading many to believe the worst is over for the real estate bubble. However, many don’t share this opinion, and conflicting theories permeate from local economists.

As far as negatives, RBC Centura said:

• Consumer confidence in the Southeast cooled significantly regarding the housing market. For the last six months of 2006, only 39 percent said it is a good time to buy real estate, down six percentage points from 45 percent in the first half of 2006.
• Nearly half of Southeastern residents (49 percent) said they are less comfortable making a major purchase. Six months ago, it was 45 percent.

Home building activity rebounded from a six-year low in November, but builders’ applications for future projects fell to the lowest level in nine years, the government said Tuesday in a report suggesting the worst is not over for the housing market.

Builders started work on new homes at an annual pace of 1.59 million in November, up from the 1.49 million rate in October, which had been the lowest reading since July 2000, the Commerce Department reported. The basis for this construction could be an uptick on national and Florida home mortgage demand.

Building permits, which are seen as a measure of builders’ confidence in the market, fell to an annual rate of 1.51 million from a 1.55 million pace in October. That was the lowest building permit level since December 1997, according to government figures.

While housing starts rebounded last month, they’re still weak compared to the building boom seen over much of the past decade. The November reading was still the second-lowest in the last five years, behind only the October figure.

This means that homebuilding remains under pressure, according to experts, largely thanks to a glut of new and existing homes on the market. Buyers are therefore faced with an ideal time to take out a Florida mortgage and receive a reasonable price on a piece of property.

“The market in general is heading downward,” said Dean Baker, co-director for the Center for Economic and Policy Research, who has long maintained that the run-up in prices and building in recent years has caused a market bubble. “There is a very big supply of new homes. Vacancy rates for owner-occupied units are at a record high. You have tremendous oversupply.”

Housing market future

The slide in permits is a clear indication of the shape of things to come, said David Seiders, chief economist for the National Association of Home Builders, who believes that housing starts won’t bottom out until the first quarter of 2007.

“The persistent downslide in permits points towards further erosion [of housing starts,]” he projected.

In addition, Seiders said the “backlog of permits can be used by builders when the weather turns surprisingly good.”

Unseasonably warm weather in the fall and winter is often a strong catalyst for home construction, but analysts said it’s unclear just how important that is in 2006. The backlog in inventory is a much bigger concern, according to analysts.

William Wheaton, research director and economics professor for the Massachusetts Institute of Technology Center for Real Estate, is even more bearish going forward and said the decline will continue for years, not months.

“I see a slowdown in this industry for at least the next two or three years, and I don’t think permits have reached the bottom,” said Wheaton, who agreed with other analysts in saying that oversupply is to blame.

It’s hopeful that low Florida home loan rates will assist lower-income borrowers, creating more purchasing activity and optimism down the line for this industry.

The South Florida Sun-Sentinel reports another company has released down-in-the-dumps Florida foreclosure figures, just in time for the holidays.

Florida leads the Southeast in filings and is second only to California in total foreclosures nationwide, according to Foreclosures.com.

More than 107,500 Florida property owners have filed for foreclosure so far in 2006. That’s already an increase of 13 percent from the 95,269 who filed for all of last year. The company cited defaults in both Broward County and Miami-Dade County as contributing to the rise.

Nationwide, nearly 877,000 homeowners were in foreclosure so far this year, up 37 percent from the 640,454 who filed last year. Escalating home values from 2000-2005 caused buyers to overextend themselves. Many took out short-term, adjustable-rate mortgages for homes they otherwise couldn’t afford and saw monthly payments balloon as mortgage rates rose.

While there’s no denying that more homeowners in the South Florida housing market will likely struggle with foreclosure in the coming months, it’s difficult to put the problem in perspective because real estate analysts differ in how they report foreclosure data.

Another firm, Boca Raton-based Foreclosure.com, counts only properties that are in foreclosure, meaning Florida mortgage lenders are in the process of trying to take back the homes. The Mortgage Bankers Association also separates home loan delinquencies from actual foreclosures.

In a quarterly snapshot of the market released last week, the Mortgage Bankers Association reported that the percentage of home loan payments that were 30 or more days past due for all Florida mortgage loans tracked jumped to 4.67 percent in the July-to-September third quarter.

That marked a sharp rise from the second quarter delinquency rate of 4.39 percent and was the worst showing since the fourth quarter of 2005. But Florida’s foreclosure rate was below the national average.

Generally, lenders consider homeowners in foreclosure when they are 120 days late making payments.

“Unfortunately, there is no uniform standard for when somebody is in foreclosure. The industry needs to come up with some kind of a standard so everyone can know what these numbers mean because right now they’re misleading,” said Louis Spagnuolo, a senior mortgage banker for Home 123 in Boca Raton.

The Florida condo market might be shaky, but H&H Development is going ahead with a 10-story project in West Palm Beach near CityPlace.

The Coral Gables-based real estate developer is building 288 condos priced from $300,000-600,000. H&H says it has about 80 percent of the units under contract. Construction has started and the condos are due to be complete in late 2007.

The development, called City Palms, is on the site of the old Hibiscus Inn on Hibiscus Street. H&H bought the land and other holdings from Richard Limehouse last year for about $7 million. It was one of a handful of deals in Palm Beach County in which longtime property owners sold to deep-pocketed condo developers.

A slow market has caused developers to shelve projects in Palm Beach and Broward counties, but Harvey Hernandez, CEO of H&H, said he’s not worried. He said he’s pleased with the sales pace so far and expects to sell any remaining condos next year.

The city of Tallahassee’s recent decision to join a real estate developer’s application for a $5 million state grant isn’t sitting well with some affordable housing advocates.

Their concern: Almost half of the city’s $2.69 million match, or $1.2 million, would come from the city’s Affordable Housing Trust Fund.

In the past, the Tallahassee Democrat reports, money has gone to help a poorer population than the teachers, firefighters and other professionals targeted by K2 Urbancorp’s “essential workforce housing” proposal.

“That fund was not created to be used the way the city is using it,” said Dorothy Inman-Johnson, executive director of the Capital Area Community Action Agency.

But David Wamsley, K2’s CEO, said the company committed to making a $600,000 donation back to the fund, which held about $1.8 million in September. And over time, part of the new homes’ appreciating values would be funneled into a new affordable housing trust that the city could use for whatever housing projects it chooses.

Wamsley estimated that new fund would grow between $600,000 and $750,000 every five years. In the past, the existing trust fund has been used to help people pay make a down payment or for infrastructure at a multihome Habitat for Humanity project, for example.

This time, it would help K2 keep costs low enough to offer homes below market rates. But they’d still be too expensive for a lot of people for whom making today’s Florida mortgage payments would be impossible.

“It’s a legitimate philosophical discussion,” said City Commissioner Mark Mustian. “There are limited resources, so what do you use them for? We don’t have enough money now for the lower-income people, and this serves a slightly higher income group.”

Mustian abstained from voting because of a potential conflict of interest with his law firm. The other commissioners all agreed to the concept in November.

The city’s $2.69 million share, plus $358,000 in private land donations, adds up to the 15-percent match of the $20.2 million development that the state requires.

Proponents say city-developer partnerships are the way of the future and will help working class people afford homes close to where they work instead of having to move into outlying rural counties where land prices haven’t surged yet.

“The soul of the community is lost when people can’t live where they work,” said Jeffrey Sharkey, a lobbyist who helped draft the legislation creating the state grant program.

Between 2002-2005, the state’s median existing home price jumped more than 70 percent, while the median family income went up less than 2 percent, according to the Florida Association of Realtors and the U.S. Department of Housing and Urban Development.

The disparity isn’t as wide in the North Florida housing market - the median price for an existing house went up 43 percent from 2001-2006 in Tallahassee, according to the Florida Association of Realtors - but some working people are still getting priced out of the market.

To help remedy the problem, the 2006 Florida Legislature passed a housing bill that includes $50 million for an affordable-housing pilot program called the Community Workforce Housing Innovation Pilot Program, or CWHIP. The program seeks to offset developers’ costs by providing money and making permitting faster and easier.

If K2 is awarded a CWHIP grant, they propose to build 92 one-, two- and three-bedroom town houses on the site of the ongoing Evening Rose development, inside Capital Circle Northeast just north of Mahan Drive. That would almost double the number of homes at Evening Rose, which is the first development built under the city’s inclusionary-housing ordinance and is currently set to feature 99 units, 10 of which will be priced just under $160,000.

With the state grant, a two-bedroom/two-bath town house would sell for as low as $159,000, instead of the market rate of $260,000, according to the developer. Assuming a 20 percent down payment, that would knock the monthly Florida home loan payment down significantly, from $1,500 a month or more to under $1,000 at current rates.

The fact that Florida mortgage rates are slightly on the rise isn’t encouraging news to sellers and Realtors. But here is something they can look forward to:

The holidays.

Thanks to tax implications, December closings are typically a popular across Tampa Bay and other parts of the state. The question now is whether the sluggish 2006 will show a holiday bump that could also add momentum into next year.

“Things are picking up, and if you’re a savvy buyer, you know that already,” said Hermun Puri, a Realtor with Keller Williams Realty’s Fate Team in Tampa. But many of the issues that led to the market slowdown are still in play, like insurance and taxes, so while potential Florida home loan borrowers might be venturing out to test the market again, there’s no guarantee they will be ready to commit.

The Homestead deadline

December has traditionally been a good closing month for sellers, averaging a 27.9 percent increase between November and December for existing homes between 2003 and 2005, Florida Association of Realtors data shows.

“At the end of the year, there’s usually a push to close,” said Cathleen Smith, Coldwell Banker’s regional senior VP for the Tampa Bay region. “If they don’t close in time, they won’t get their Homestead (exemption) for the year, and that’s $25,000.”

Interest from buyers was higher in years before the tough hurricane seasons of 2004 and 2005 prompted higher insurance rates. Also contributing to 2006’s unpredictability is the slight dip in the median price, which shows buyers paying practically the same amount they did a year ago during the housing boom and 31 percent more than two years ago.

State elected officials appear to be working on ways to alleviate skyrocketing insurance costs, but they may be too late to help December sales, said Brad Monroe, president of the Greater Tampa Association of Realtors. He’s afraid Florida home mortgage numbers won’t match those of the past.

“Our November numbers were fairly lackluster in terms of sales, but I have had a dozen people tell me that things really seem to be picking up,” Monroe said. “They’re getting more buyers’ calls, more activity, so hopefully we’ll be seeing some turnaround.”

End of investor interest

“It was a true success for us in 2006 to pull this many sales together,” said Felix Amon, CEO of Amon Investments, who is building the $50 million, 126-unit Station Square on Cleveland Street. “The media was drumming that there was an oversupply of property, and who knows if we can ever absorb it. We felt that if we could manage to meet a 60 to 65 percent sales quota, we were going to build it. We did, and we estimate the market will come back as well in 2007 or 2008.”

If there was any positive in the 2006 housing market downturn, it would have to be found in what it created, said Puri, who became a Realtor while the boom was still on.

The investors are gone, so those buying homes in Florida are people planning to stay, Puri said. Joining those investors out of the market are Realtors who were just looking to make a quick buck while the market was hot.

“I’m in it for the long run,” Puri said. “If you can make it through this period, you will be doing great on the other side.”